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Russians said goodbye to approximately RUB 2 billion (USD 38m) of their personal funds last year because of the activities of financial pyramids in the country. The gloomy estimate was unveiled by

Sergey Shvetsov, first deputy governor of the Bank of Russia, in an interview with TV channel Russia-24.

Mr Shvetsov, who is also known for his hard stance regarding the regulation of Russia’s Forex industry and the defense of low leverage, noted that the count of financial pyramids in Russia had ballooned during the past couple of years, whereas the size of these “businesses” was getting smaller. He attributed this trend to the increased use of Internet and the overall hardships the Russian population is experiencing in terms of financial stability.

The Central Bank has been co-operating with the police to stop the work of financial pyramids, Shvetsov added, stressing that during 2014 the Bank of Russia and the police have managed to halt the operations of 257 such fraudulent organizations. The count of financial pyramids in Russia, however, is much higher, he conceded.

Lately, the activity of a reborn MMM has spurred, with its head – the notorious Sergey Mavrodi, criticizing the participants for not being devoted enough and for not attracting a higher number of new clients to the pyramid. Mavrodi is still hiding from Russia’s police…

In order not to become a victim of a financial pyramid, everyone should check whether the company whose services they are using has a license issued by the Bank of Russia, Shvetsov recommended. He said one of the signs that a company is a pyramid is the high return percentage pledged. High, he specified, means at least 2 or 3 times bigger than the rates offered at an average bank.

It is worth noting that Russia’s Ministry of Finance has drawn up a text with amendments to the penal code, which for the first time in Russia’s legislative history proposes a definition of a “financial pyramid” and envisages tough penalties for those who organize and participate in such scams. Those who set up financial pyramids will face hefty fines and a jail term of up to 6 years. Penalties are proposed for those who lure potential clients to financial pyramids – they will have to pay fines of up to RUB 50,000. Presenting the activities of financial pyramids in a positive way will also be treated as a crime, under the planned legislative amendments.

Adding to the data mentioned by Shvetsov, the Ministry of Finance says that since 2008 Russians have lost RUB 40 billion because of financial fraud.

To watch the full interview with Sergey Shvetsov (in Russian), click here.